Senate Unveils 309-Page CLARITY Act, But Ethics Deadlock Could Sink Thursday’s Vote

• The revised draft includes language protecting blockchain developers and infrastructure providers from being treated as money transmitters if they do not hold customer funds in custody.
• The proposed bill also imposes stricter reserve requirements for stablecoins and establishes a $10 billion threshold before federal oversight applies to state-chartered issuers.
• Senator Kirsten Gillibrand and other democrats have warned the bill may fail without an ethics provision restricting crypto-related business activity by senior government officials.

The Senate Banking Committee released an updated 309-page draft of the CLARITY Act ahead of a markup vote scheduled for Thursday, with committee members given until the end of Tuesday to file amendments.

Committee Chair Senator Tim Scott (R-SC) said the revised text delivers "certainty, safeguards, and accountability" for the digital asset industry and is the product of months of negotiations between lawmakers, crypto firms, and banking lobby groups.

Industry observers said the release removes one of the key reasons institutional participants have been sitting on the sidelines. "Market makers and institutional flow desks have been operating in a holding pattern on their onchain strategies precisely because the regulatory perimeter has been undefined,"  stated Alexis Sirkia, Founder of Yellow Network. "The CLARITY Act, once through markup, starts to draw that perimeter." 

Sirkia added that the alignment between the Senate version and the House bill will determine whether the final text is workable for the institutional layer, and that once jurisdictional clarity between the Secutiries and Exchange Commission (SEC) and Commdotity and Futures Trading Commission (CFTC) lands. 

What's In The CLARITY Bill?

The updated draft includes language tied to the Blockchain Regulatory Certainty Act, which clarifies that software developers and infrastructure providers who do not control customer funds should not be treated as money transmitters under federal law. 

It also introduces a $10 billion cap for state-chartered stablecoin issuers before mandatory federal supervision kicks in, and tightens reserve standards to require 1:1 backing using cash or short-term U.S. Treasuries, effectively shutting algorithmic stablecoins out of the regulated U.S. market.

Ethics Provision Could Still Stall The Bill

The draft does not include ethics restrictions on federal officials profiting from crypto ventures while in office , and that absence could sink it.

"There will be no one voting for this bill if we don't have an ethics provision," Senator Kirsten Gillibrand (D-NY) stated at Consensus Miami 2026 last week. She was pointing to President Donald Trump's sprawling crypto business interests, including the Official Trump (TRUMP) memecoin and World Liberty Financial (WLFI), which last year launched the USD One (USD1) stablecoin.

The TRUMP token’s price fell 3.7% in the last 24 hours to around $2.35. Retail sentiment around the memecoin  on Stocktwits trended in ‘neutral’ territory over the past day, accompanied by ‘low’ levels of chatter. 

The WLFI token edged down 0.63% over the last 24 hours to around $0.067. Retail sentiment, meanwhile, trended in the ‘bullish’ zone alongside ‘low’ levels of chatter over the past day. Sentiment around its USD1 stablecoin was in ‘neutral’ territory, with ‘normal’ levels of chatter.

Traditional banks are not satisfied either. American Bankers Association CEO Rob Nichols warned in a letter circulated over the weekend that the current draft could encourage deposits to move from banks into stablecoins, weakening lending capacity and financial stability.

Coinbase Says Circle Deal Unchanged

Coinbase (COIN) Brian Armstrong said during the company’s first quarter (Q1) earnings call that the company does not expect its commercial relationship with Circle (CRCL), the issuer of USDC (USDC) , to change under the new legislation. "The contracts that we have in place with Circle are set," he said. "We expect to continue to go forward with our relationship with Circle under those same terms." He added that many implementation details will depend on future rulemaking after the legislation passes.

CRCL's stock moved as much as 2.7% higher in pre-market trade on Tuesday, with retail sentiment on Stocktwits trending in ‘bullish’ territory alongside ‘extremely high’ levels of chatter.

Meanwhile, COIN’s stock dropped over 1% in early morning trade. Retail sentiment around the company trended in ‘bullish’ territory, accompanied by ’high’ levels of chatter.

Read also: Peter Schiff Says Michael Saylor's Strategy Is Running A Ponzi Scheme In Plain Sight — And The SEC Is Letting It Happen

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